The "Great Recession" has been anything but great for most peoples' bottom line. According to the National Bankruptcy Research Center, over 1.5 million people have declared bankruptcy in 2010, while RealtyTrac reports that 1.05 million homes went into foreclosure the same year. Both of these rates are record high numbers, and the pain is being felt all over the country.
But if you think "making it big" will insulate you from the harsh realities of the economy, think again. Here are five big-time celebrities that have taken some big-time losses:
Lenny Kravitz - After a stellar decade in the recording business, Grammy-award winning Kravitz purchased a 6,000-square-foot duplex in New York's SoHo for between $7 million and $8 million in 2001. He must have thought it was a great investment, because he turned around and put it back on the market within a year for more than $17 million. Unfortunately, when the World Trade Center fell, so did NYC . Three years later the duplex was still on the market at a discounted price of $13 million. Hoping to do better on the sale, he pulled the property from the market, did $1 million worth of renovations, and re-listed it for $19.5 million. The property sat on the market for another three years. It wasn't until he dropped the price to $14.9 million that he attracted the interest of Alicia Keys and Swizz Beats, looking for a home for their growing family. Don't cry for Lenny, though. Even though he accepted an offer that was $5.4 million less than his original asking price, it is still double what he paid for the home a decade ago. And he still has homes in Paris, New Orleans, and Rio to hide out in and count his money.
Beck - Rather than sticking with his successful music career, Beck thought he would venture into the "lucrative" flipping. His first foray was a 1,600-square-foot, 3-bedroom, 2-bath ranch that he purchased for $2.1 million in 2007. Instead of flipping it quickly and turning a profit, he had to hold onto it for three years and finally sold at a loss of $400,000. The next home he speculated on was a 5,700-square-foot, 6-bedroom, 9-bath home that he purchased for $6.8 million. After spending a year making improvements, he put it back on the market for $9 million. Unfortunately, this, too, sat on the market for three years, until Shondra Rhimes of "Grey's Anatomy" and "Private Practice" fame, got it for a low-ball offer of $3.9 million. That is $1.9 million less than he spent originally, which proves he really is a loser, baby.
Scarlett Johansson - Noted for her beauty, not her real estate acumen, Johansson has taken baby steps in learning how to lose money on real estate. Her first purchase, her Leonard Street Loft, was sold in 2008 for $52,000 less than the $1.95 Million she paid for it in 2006. Her next home, a 1931 Spanish villa in the desirable Outpost Estates neighborhood of Los Angeles, was purchased in 2007 for $7 million. After closing, Johansson embarked on a massive restoration project, including new doors, windows, appliances and even a solar-powered electrical system. Perhaps her neighbors Orlando Bloom and Charlize Theron had too many wild parties, or she is simply as fickle with her homes as she is with her men. Whatever reason, she sold the home two years later for $2 million less than she paid for it. She subsequently dumped her husband, Ryan Reynolds, six months later, too.
Toni Braxton - Just because you are a six time Grammy winner does not mean that you know how to handle money. While some celebrity's misfortune can be blamed on the plunging real estate market, Braxton's misfortune can be blamed on fiscal irresponsibility. She made millions of dollars from songs such as "Un-Break My Heart," but in September 2010, she and her company, Liberty Entertainment, filed for bankruptcy for the second time. Her debts were listed at $50 million, with assets of only one to $10 million. Creditors included the IRS, Neiman Marcus, and Cedars-Sinai Medical Center. Her $2.6 million Nevada home was sold in foreclosure for just over $1 million, while her $1.2 million Georgia home just went into foreclosure. Her first bankruptcy was in 1998 after splitting from her record company. Her money mismanagement woes included over $500,000 in overdraft fees in 1997 alone.
Nicholas Cage - Living proof that you don't want to mess with the IRS, Nicholas Cage has had to suffer innumerable real estate losses to satisfy Uncle Sam. The real estate fire sale began in 2009 when the IRS put a lien on some of Cage's properties because he owed them $6 million for purchases made in 2007. He listed his $1.7 million home for less than $1 million and his $15.7 million estate in Rhode Island for only $7.8 million. His two New Orleans homes, valued at $3.5 million each, were sold as a package deal for $4.5 million. His $8.5 million Vegas home was sold for $5 million, while his $9.5 million Manhattan apartment was sold for $7.5 million. Crowning him the undisputed "Biggest Loser - Celebrity Home Edition" was his $35 million Tudor Mansion in Bel Air, which sold in foreclosure for a paltry $10.5 million.
Hopefully these million dollar misfortunes will give you a new perspective on your own minor (by comparison) financial foibles. The lesson is this: little money, little problems; big money, big problems.
Barbara Green is The Design Diva and owner of Sensibly Chic Interior Design. Follow her on Twitter @thedesigndiva.
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